Most investors in the housing market will require the services of a mortgage lender. Here are five key factors to consider when making your selection.
We’re spoilt for choice when it comes to home loans and mortgage lenders, and that’s a good thing. More choice means more competition, and this provides better opportunities to secure a great home loan deal when you’re looking to get a foothold in the property market.
However, it does raise the question of how to choose between lenders.
The solution is to narrow down your search by focusing on five main points.
1. The interest rate
Let’s face it, price matters. Over the term of your home loan, even a small difference in the rate you pay on your home loan interest rate can make a significant difference to the overall cost of your mortgage. So shopping around for a competitive rate before investing in the housing market is a sensible step. That said, the rate shouldn’t be the only factor you consider. After all, changes to the housing market forecast and interest rates over the lifetime of your loan are inevitable, so it’s important to consider additional features of different home loans before making your decision.
2. The loan type
Some mortgage lenders offer a limited selection of home loans, others a wider variety that may include construction loans, line of credit loans, package loans and more. Choosing the right type of home loan for your needs makes it far easier to achieve your property or home ownership goals.
3. Loan features
Home loans have become far more flexible in recent years and there is a wealth of different features that can be used to pay off your loan sooner or help you manage your money more effectively. Some very low rate loans mightn’t provide the breadth of features, and they could prove to be costly in the long run.
4. Hidden costs
A cheap home loan can come with a raft of fees that can really ramp up the cost. Some of these fees may be taken into account in the loan’s comparison rate, which incorporates the headline rate as well as upfront and ongoing monthly fees.
But the comparison rate doesn’t take all fees into account.
The cost of using redraw, for example, isn’t included in the comparison rate. This makes it essential to know exactly what sorts of fees a mortgage lender charges and how they could impact you.
When you’re considering a mortgage lender you have never used before, it can be hard to know the level of service you’ll receive once your home loan is underway. Asking friends, family or work colleagues already on the property market about their experiences with different mortgage lenders can be a useful starting point to gauge customer service.
When you’re looking to enter the housing market, the process of choosing a home loan and mortgage lender is a lot easier when you speak with your local Aussie broker. Using specialist software, we can compare hundreds of home loans in a matter of minutes, and our industry experience gives you insights into what to expect from different mortgage lenders over time.
Have we missed something? What important factor do you look out for when comparing mortgage lenders – tell us in the comments below!
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Aussie does not provide any financial or investment advice. This article has been prepared as a factual guide only. It does not take account of your objectives, financial situation or needs. Aussie recommends that you seek independent financial advice and obtain your own professional legal and taxation advice before making an investment decision.